Lesson 2 - Macroeconomic Indicators

Question 1

What are the 5 macroeconomic objectives in an economy?

Answer 1

• low inflation (target 2%, range 1-3%)
• reasonable balance of payments
• strong, steady economic growth
• low unemployment
• low budget deficit

Question 2

What are the 4 macroeconomic indicators?

Answer 2

• current account
• CPI and RPI
• ILO and claimant count
• GDP

Question 3

What is the difference between a real and nominal figure?

Answer 3

• real = adjusted for inflation
• nominal - doesn’t take inflation into account

Question 4

How do you calculate GNI?

Answer 4

GDP + incomes from abroad

Question 5

What are the 2 ways to measure unemployment?

Answer 5

• ILO
• Claimant count

Question 6

What is the claimant count?

Answer 6

• the number of people claiming benefits

Question 7

What is the ILO?

Answer 7

• Quarterly survey that asks every household about their labour status

Question 8

Why is the ILO the preferred way of calculating unemployment?

Answer 8

• it includes everyone who is unemployed, not just those who are claiming benefits

Question 9

What is the important part of the BoP and what does it look at?

Answer 9

• the current account
• looks at the imports and exports (balance of trade)

Question 10

What are transfer payments?

Answer 10

Payments made to benefit recipients from the government

Question 11

What does the RPI stand for and what does it include?

Answer 11

• retail price index
• includes mortgage costs and is affected by interest rates

Question 12

Explain the RPI

Answer 12

• the ONS tracks the prices of a variety of products
• the products are given their weight and the inflation rate is calculated

Question 13

Explain the CPI

Answer 13

• Family expenditure survey
• track what 7000 households spend their money on
• whatever goods are bought the most are given more importance
• the weights for the goods are given, and the inflation rate is calculated